Dominican’s Brennan School of Business, in partnership with the Illinois Hispanic Chamber of Commerce (IHCC), recently released the results of a survey on the extent of internationalization of Hispanic-owned businesses in the State of Illinois. The survey, which was partially funded through JP Morgan Chase Foundation, focuses on two components of global integration: selling internationally and purchasing internationally. Details from the survey will be shared during a breakfast meeting of the Illinois Hispanic Chamber of Commerce on Thursday, March 30 at 8 a.m. at the Union League Club, 65 W. Jackson Boulevard.
Latino/Hispanic-owned businesses represent a major economic engine in the American economy. The most recent Survey of U.S. Business by the U.S. Census Bureau indicates that the number of Hispanic businesses increased by 46 percent between 2007 and 2012, to 3.3 million businesses that, together, generated $473 billion in sales. According to the 2016 Kauffman Index of Startup Activity, Hispanics are founding businesses at a rate of 1.5 times that of the general U.S. population.
The State of Illinois has the fifth largest concentration of Hispanics and Hispanic-owned businesses in the country. The 2014 Annual Survey of Entrepreneurs identified more than 11,000 Hispanic businesses, representing $2.35 billion in payroll. Since the Hispanic population is a large and growing demographic in the state, helping Hispanic entrepreneurs to found and maintain businesses will allow the state to create jobs, generate wealth for company owners and employees, and generate billions of dollars in additional business revenues.
The Brennan/IHCC survey, conducted by Dr. Al Rosenbloom, professor of marketing and international business, and Dr. Derek Ruth, assistant professor of strategic management, included 120 firms, most of which were founded after 2000. Participating firms were identified through IHCC membership, clientele and contacts. Among respondents, roughly half (48 percent) do some amount of international purchasing and over one third (38 percent) sell products internationally. Approximately 29 percent of the businesses are considered globally integrated, indicating that they purchase and sell goods internationally, and 43 percent are considered domestically-focused, indicating that they do not engage in international purchasing or international selling,
The survey indicates that Hispanic-owned businesses are motivated to become globally integrated and perceive a great deal of upside in internationalization, including firm growth, value chain enhancements and operational efficiencies. Among the benefits of international engagement, Hispanic businesses indicated that the most important were opportunities for enhancing a company’s prestige, profitability and expertise. However, many companies cited significant barriers to internationalization, namely, on the selling side, an inadequate knowledge of the export process, a lack of products or capacity to satisfy international markets, and a lack of time and knowledge for accomplishing international sales; and, on the purchasing side, the ease of finding acceptable domestic sources due to competitive pricing, a lack of expertise in selling abroad and the risks associated with getting paid and enforcing contracts.
The survey concludes that sophisticated support programs offered by governmental programs and business development organizations such as the IHCC, customized to the particular needs of firms across internationalization levels, would greatly benefit Hispanic businesses interested in advancing their global reach or entering the global marketplace. In addition, more globally integrated Hispanic firms could greatly help those firms interested in expanding their international presence by serving as mentors. The survey also identifies many opportunities for spurring internationalization by facilitating targeted trade missions to Latin American and other key emerging markets, creating networking alliances with foreign-based Chambers of Commerce, providing training opportunities in areas such as international strategy and international investments, and partnering with area universities.